Major semi trade groups blast Trump crackdown on Huawei

Huawei building
Trump Administration restrictions on sales to Huawei will hurt U.S. chip sales and the U.S. tech's reputation for reliable technology, trade groups say. (Fierce)

Two major semiconductor trade groups representing thousands of companies on Monday blasted the Trump Administration’s recent expansion of U.S. restrictions on sales of chips and software to China’s Huawei. 

The U.S. has argued for years that Huawei has undermined U.S. national security with the technical ability to monitor networks and data, especially with 5G deployments of Huawei networking and radio gear.

 However, the two trade groups believe the Aug. 17 actions of the U.S. Commerce Department will backfire and act to undermine the semiconductor industry in the U.S. with lost sales, not only sales to Huawei, by creating a perception that U.S. technology is unreliable.

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“These new restrictions will …fuel a perception that the supply of U.S. technology is unreliable and lead non-U.S. customers to call for the design-out of U.S. technology,” said SEMI, an industry association for the global electronics design and manufacturing supply chain. SEMI works with 2,400 member companies and 1.3 million professionals.

Last week, another major trade group, Semiconductor Industry Association, criticized the latest Commerce ruling for being broad and predicted “significant disruption to the U.S. semiconductor industry.” CEO John Neuffer said he was surprised and concerned by the Trump administration’s shift from a more narrow approach to achieving national security goals while limiting harms to U.S. companies.

“We reiterate our view that sales of non-sensitive, commercial products to China drive semiconductor research and innovation here in the U.S., which is critical to America’s economic strength and national security,” Neuffer added. SIA represents 95% of U.S. semiconductor companies by revenue. U.S. semiconductor companies had $193 billion in sales in 2019, nearly half of the entire global amount.

In July , SEMI had argued  that a set of earlier trade regulations on Huawei in May “created unique disincentives to purchase U.S.-origin semiconductor equipment and design software and had already resulted in $17 million in lost sales of U.S.-origin items to firm unrelated to Huawei.” SEMI added on Monday, “Commerce’s decision to significantly expand these unilateral restrictions will likely lead to more lost sales, eroding the customer base for U.S. origin items.”

SEMI asked Commerce for a 120 day extension on its latest ruling for chips and other items in  production before Aug. 17 and asked for “significant flexibility for licenses unrelated to 5G items.”  The Trump administration should “pursue policies with few unintended consequences and damage to U.S. technology leadership,” SEMI added in a statement. “Revenue from global sales is a major source of U.S. research and development funding in these technologies; lost global revenue will lead to a decrease in R&D, undermining U.S. semiconductor innovation and thereby harming national security.”

The Aug. 17 ruling by Commerce took immediate effect saying that no company subject to export-control jurisdiction may deal with Huawei or any other company on the Commerce Department Entity List.  Commerce also added 38 Huawei affiliates in 21 countries to the Entity List. 

“Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party,” Commerce Secretary Wilbur Ross said at the time.  “As we have restricted it access to U.S. technology, Huawei and its affiliates have worked through third parties to harness U.S. technology in a manner than undermines U.S. national security and foreign policy interests. This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so. “

Huawei has argued it does not serve at the behest of the Chinese Communist Party and would not spy on customers.  Even so, the U.S. has been effective in preventing major U.S. carriers from using Huawei equipment and has persuaded some foreign governments to block use of Huawei gear.

The Department of Commerce did not respond to a request to comment on this story.

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